Selling a House During Divorce in California — Where Do We Start?

First Question: Have You Both Agreed to Sell?

If the answer is yes, that gives us a much easier starting point.

You don't necessarily have to agree about everything else happening in the divorce.

You don't have to enjoy speaking to one another.

And you certainly don't have to pretend everything is wonderful for my benefit.

But we do need enough cooperation—or appropriate legal authority—to make decisions required for the real estate transaction.

If both owners agree the house should be sold, we can begin discussing:

• Property value
• Listing price
• Property condition
• Repairs, if any
• Showing arrangements
• Offers
• Escrow
• Existing loans and liens
• Estimated proceeds

If you don't agree about whether the house should be sold, that's different.

I can't resolve that disagreement as your real estate broker.

California Courts explains that divorcing spouses can agree about how property will be divided and ask the court to approve their agreement. When they cannot agree, a judge may ultimately make the decision.

So if one spouse tells me:

“Sell the house.”

and the other says:

“Absolutely not.”

we may need to wait for your attorneys or the court to determine what happens next.

Do We Have to Wait Until the Divorce Is Final to Sell?

Not necessarily.

A home may potentially be sold while a divorce is pending, but this is one of the areas where I want your attorney involved.

Once a California divorce case has begun, there can be court orders and restrictions affecting property. California Courts notes that rules imposed during a divorce can restrict spouses from selling property while the case is underway.

That doesn't mean a house can never be sold before the divorce is final.

It means:

Don't make assumptions about your authority to sell it.

If there's a pending divorce, tell me.

If there are court orders involving the property, tell me.

If your attorneys have already agreed upon a sale, that's useful information.

And if you're unsure whether you're authorized to proceed, that's a question for your attorney before we put the property on the market.

Who Actually Owns the House?

This sounds obvious.

Sometimes it isn't.

We need to know how title is currently held.

Maybe both spouses are on title.

Maybe only one spouse is.

Maybe the property was purchased before the marriage.

Maybe one spouse inherited it.

Maybe separate funds were used for part of the purchase.

Maybe community funds were subsequently used to pay the mortgage.

Those details can matter significantly in a divorce.

California distinguishes between community and separate property, and property can sometimes contain elements of both. California Courts specifically gives the example of a home purchased partly with separate funds and subsequently paid down using community funds.

I don't decide who owns what portion of the equity.

That's an important boundary.

Your attorneys and the court handle the legal determination of property rights.

From the real estate side, I need to understand who is on title and who must participate in the transaction.

Let's Find Out What the House Is Actually Worth

This is where I can be much more useful.

Before you argue over who gets the equity, wouldn't it be helpful to know approximately how much equity there actually is?

We start with the property.

What would it realistically sell for in today's market?

Not:

What Zillow says.

Not:

What your neighbor sold for three years ago.

Not:

What one spouse needs the property to be worth for the settlement math to work.

We look at the actual house and current market.

That includes:

Location.

Size.

Condition.

Upgrades.

Deferred maintenance.

Lot.

Comparable properties.

Current competition.

Recent sales.

And buyer demand.

My job is to give both parties a realistic real estate opinion—not the number that makes one side happier.

Then We Determine What Is Owed

Market value isn't equity.

Suppose the house could sell for approximately $800,000.

That doesn't mean there is $800,000 to divide.

There may be:

A first mortgage.

Second mortgage.

HELOC.

Partial claim.

Tax liens.

Judgments.

Delinquent property taxes.

HOA obligations.

Other recorded liens.

And, of course, selling expenses.

California's divorce process requires financial disclosure of assets and debts, and the state's self-help guidance specifically identifies documents such as mortgage statements and property titles among the records that may need to be gathered.

From the real estate side, we need accurate payoff and title information so we can develop a realistic estimate of what the transaction might produce.

Let's find the money before we divide the money.

What If We Don't Have Much Equity?

That can happen.

Perhaps the house was purchased recently.

Maybe property values declined.

Maybe there are multiple loans.

Perhaps one or both spouses obtained mortgage assistance.

Maybe there are liens nobody accounted for.

If the expected sale proceeds aren't sufficient to satisfy the mortgage and other obligations required to complete a conventional sale, we may have a different problem.

Depending upon the circumstances, a short sale could potentially need to be considered.

I've handled short sales and distressed-property transactions for many years, so if the numbers don't work, I want to know that early.

A divorce is complicated enough.

We don't want to discover three weeks before closing that the house itself has a financial problem.

What If One Spouse Is Still Living in the House?

Very common.

One person moves out.

The other stays.

That doesn't necessarily prevent the property from being sold, but we need to establish practical ground rules.

Who will provide access?

How will showings work?

Are there pets?

Who will keep the property reasonably presentable?

How much notice is needed?

Who communicates about scheduling?

California courts can also issue temporary orders concerning who has use or control of property and who pays certain expenses while a divorce is pending.

If such an order exists, I need to know about anything relevant to the real estate transaction.

Otherwise, our goal is simply to create a showing process that is reasonable and predictable.

What If We Aren't Speaking to Each Other?

You wouldn't be the first divorcing couple I've encountered who doesn't particularly enjoy communicating.

You don't have to use me as a messenger for your marriage.

But we can structure the real estate communication so both parties receive the same information.

For example, when appropriate:

Both receive important emails.

Both receive offer information.

Both receive transaction updates.

Both know about significant deadlines.

Both receive relevant market feedback.

That helps keep the real estate transaction transparent.

My preference is simple:

Same information. Same facts. Same transaction.

I'm not interested in becoming part of the personal dispute.

I'm Not Going to Take Sides

This is important enough for its own section.

If I'm engaged to sell the property in connection with a divorce, I'm there to sell the property.

I'm not there to determine:

Who caused the divorce.

Who deserves more money.

Who behaved badly.

Who should have moved out.

Who paid more of the mortgage.

Who is being unreasonable.

Or whose attorney is driving everyone crazy.

😂

Those issues may be extremely important to you.

But they're outside my role.

When it comes to the real estate transaction, my objective is:

Protect the transaction, communicate clearly, market the property effectively and help obtain the best reasonable outcome from the sale.

Neutrality matters.

What If One Spouse Wants a Higher Listing Price?

This happens even without divorce.

During divorce, however, pricing disagreements can sometimes become proxies for larger disagreements.

One spouse says:

“List it for $950,000.”

The other says:

“I just want this over. List it for $825,000.”

My answer isn't to split the difference.

It's to look at the market.

I'll explain:

Recent comparable sales.

Current competition.

Property condition.

Market activity.

Likely buyer expectations.

And the pricing strategy I believe gives the property the best opportunity to sell.

Then you make the decision you're legally authorized to make.

The market doesn't know you're getting divorced.

Buyers will value the house based upon the house and the market.

Do We Need to Fix the House Before Selling?

Not automatically.

Divorcing homeowners sometimes have very little appetite for undertaking a remodeling project together.

Understandably.

Before spending money, let's determine whether repairs are financially worthwhile.

Maybe paint and minor improvements would materially improve marketability.

Maybe substantial repairs are needed.

Or perhaps selling as-is makes more sense.

We'll compare:

Potential selling price as-is.

Potential selling price after improvements.

Cost of improvements.

Time involved.

Holding expenses.

And the practical reality of coordinating the work.

Sometimes maximizing the net proceeds is more important than maximizing the sales price.

Who Pays for Repairs?

That's something the parties need to agree upon or address with their attorneys when necessary.

I can tell you:

This repair may help the property sell.

I can't decide:

Husband pays 70% and wife pays 30%.

That's not my lane.

The same principle applies to mortgage payments, utilities and other expenses while the house is listed.

If those matters are disputed, your attorneys may need to resolve them.

What Happens to the Money When the House Sells?

Escrow will account for the obligations associated with the transaction according to the applicable instructions and requirements.

That may include mortgage payoffs, applicable liens, transaction expenses and other authorized items.

What happens to the remaining proceeds between divorcing spouses depends upon their agreement, court orders and circumstances.

Again:

I sell the real estate.

I don't determine your divorce settlement.

If there are specific instructions or court orders regarding proceeds, escrow and the appropriate legal professionals need that information.

What If One Spouse Wants to Buy the Other Out?

Then selling on the open market may not be necessary.

But you still need to know what the property is worth.

The legal and financial mechanics of a buyout—including ownership interests, refinancing, loan qualification and settlement terms—should be handled with the appropriate attorneys, lenders and other professionals.

From the real estate side, determining a reasonable current market value may help everyone evaluate the option.

Sometimes a buyout works beautifully.

Sometimes the spouse who wants the house discovers they can't qualify to refinance it.

Sometimes the numbers simply don't work.

That's why value is information, even when the ultimate decision isn't to sell.

What If There's a Tax Lien, Judgment or Other Problem?

Welcome to Special Circumstances inside Special Circumstances. 😂

Divorce doesn't protect a property from having all the other complications we've been talking about.

A divorcing couple may also be dealing with:

Tax liens.

Judgments.

A previous loan modification.

Partial claims.

Foreclosure.

Little or no equity.

Deferred maintenance.

Code enforcement.

Or some combination of them.

That's why we investigate the complete property situation early.

A complicated title or financial issue doesn't necessarily prevent a sale.

It simply means we need to identify what needs to happen.

What If We're Behind on the Mortgage Too?

Tell me immediately.

Timing becomes particularly important if mortgage payments have been missed or foreclosure proceedings have begun.

We need to know:

How far behind are the payments?

Has a Notice of Default been recorded?

Is there a scheduled trustee sale?

What is the property worth?

What is owed?

Is there enough equity for a conventional sale?

If not, might a short sale be appropriate?

Divorce and mortgage distress can occur simultaneously, and waiting doesn't usually make the real estate portion easier.

What If We Agree About Nothing Except Selling the House?

Believe it or not:

That's enough to give us somewhere to start.

You don't have to settle every aspect of the divorce before we discuss the property.

If you have appropriate authority to sell and both agree the house needs to go, we can concentrate on the real-estate decisions in front of us.

One decision at a time.

What is it worth?

What condition is it in?

What do we owe?

How should we price it?

How will showings work?

What offer makes sense?

What does escrow need?

That is much more manageable than trying to solve the entire divorce at the kitchen table.

Where Do We Start?

If you're considering selling a California house during divorce, start by gathering what you already know.

Who is on title?

Is a divorce already pending?

Are there any court orders affecting the property?

Do both spouses agree to sell?

Who currently occupies the property?

Approximately what is owed on the mortgage?

Are there other known liens?

Is the mortgage current?

What condition is the house in?

You don't have to have every answer.

That's simply our starting point.

From there, I can help you understand the real estate side of the situation while your attorneys handle the divorce side.

Selling Your California House During Divorce Doesn't Have to Become Another Battle

Divorce is already stressful.

Selling the house shouldn't create an entirely new conflict if we can avoid it.

My approach is straightforward:

Neutral communication.

Realistic valuation.

Clear information.

No taking sides.

No unnecessary drama.

And when something falls outside my role as a real estate broker, I'll tell you.

I've been a California real estate broker for more than 26 years and have handled complicated property transactions throughout Southern California.

If you and your spouse need to sell, you don't have to have everything figured out before calling me.

Tell us what's happening with the house.

We'll start there.

Divorce can involve complex questions concerning ownership, community and separate property, court orders, sale proceeds and authority to sell real estate. A real estate broker does not provide legal advice or determine the parties' rights in a divorce. Homeowners should consult their family-law attorneys regarding their individual circumstances and any court orders affecting the property. This page provides general real estate information only.

Resources

Selling a House During Divorce in California — Where Do We Start?

Can We Sell the House Before the Divorce Is Final?

What If One Spouse Wants to Sell and the Other Doesn't?

How Do We Sell the House If We Aren't Speaking to Each Other?